Prospecting over the holidays

Work and fun intersect during the holidays. You attend parties and meet people who could be great clients.

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You know to dress well, not drink too much, go with the flow and get people talking. Your key objectives are to make a good impression, learn enough about them to identify common interests and lay the groundwork to see them again. Avoid sounding like a salesman because, as the saying goes, “desperate people don’t get dates.”

Questions and Answers

You can handle the obvious ones like, “What do you do?” and, “How much do you charge?” Others can be potential minefields.

1. “How’s your year been?” It’s the holiday version of, “How’s business?” With the S&P 500 up over 25% it’s likely you’ve had a good year, especially if you’re paid on assets enrolled in fee-based programs.

Answer to Avoid: “I’m having my best year ever! I don’t even have time to cash the cheques. I don’t know what I’ll do with all this money.”

Why: They think “brokers” are overpaid and make easy money at the expense of clients who pay exorbitant fees.

Better Answer: “Fortunately it’s been an excellent year for my clients. When they do well, so I do. After several difficult years in the market I’m glad they’ve had a year with excellent returns.”

2. “Are you taking a winter vacation?” Business slows down at the end of the year in many industries. Teachers, for example, get winter breaks.

Answer to Avoid: “Absolutely. I put my business on automatic pilot starting December 1. We’re going on a really expensive cruise. Want to hear about it?”

Why: You imply you are not available for your clients in December and that living a lavish lifestyle is more important than their needs. You are ostentatiously spending money, which they perceive as fees your clients paid you.

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Better Answer: “I can’t, because our business is different. In December, we have to work while others play. Clients often sell stocks right after Christmas to take gains or losses for tax purposes. Some need to set up retirement plans or take distributions by December 31. If my clients need me, they must be able to reach me.”

3. “What’s the market going to do in 2014?” Some people assume “fortune teller” is part of the skillset required to be a financial advisor. You need to have an answer.

Answers to avoid: (1) “The market is going up. It’s gone up this year. What could stop it?” (2) “No one knows. It could go up, it could go down or it might fool us all and go sideways.”

Why? Predictions without a factual basis sound pompous. Wishy-washy answers imply you’re ducking the question.

Better Answer: “A lot depends on what the economy does. As you know, the stock market is often considered a leading indicator of what the economy will do six or more months down the line. If you believe the economy will strengthen, the stock market is usually a good place to be. (Insert your opinion here.)”

4. “I did great on my own this year and I didn’t use a broker. Why should I?” With the market up so much this year, most people with diversified stock investments made money. What do they consider a “great” return?

Answer to Avoid: “So how much did you make? Twenty-five percent? I could have done a lot better for you.”

Why: Don’t rain on their parade. They are proud they did well. They might have checked their stocks three times a day. You don’t know what they own or their tolerance for risk.

Better Answer: “The market’s up 25% year-to-date. If the stock portion of your portfolio is up 25% or more, net of fees, you have done pretty well. Congratulations. One note of caution: it’s important to look at the degree of risk you took to earn that return. That’s one of the areas where an advisor adds value.”

5. “Did your clients make money?”

Answers to Avoid: (1) “Some did, some didn’t. There are so many I lose track.” (2) “Absolutely. They all beat the market.”

Why: The answers are vague. It sounds like you don’t care if your clients make or lose money.

Better Answer: “The market is up 25% year-to-date. Clients who took my advice made money. Bear in mind the market is made of sectors. Some do better than others. For example, the health care and consumer discretionary sectors were up almost 35%. Part of my job is to advise clients to overweight certain sectors to try and further increase their return.”

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